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General news

  • A leaked government document titled “EU Exit Analysis – Cross Whitehall Briefing” suggests that every sector of the UK economy will be hit with every region of the UK being worse off by up to 8% compared to if the UK stayed in the EU.

Agriculture

  • Cotton futures prices are down following the release of export data which showed that US export sales were down 75% last week compared to the previous week at just 67,700 running bales. The figures are the lowest for the 2017/18 marketing year which started last August. The reason for the price and export sales drop is the shortage of trucks available to ship cotton to US ports, compounded by new regulations on driver hours.
  • The EU has proposed to ban palm oil biodiesel as of 2021 on the back of concerns that palm plantations cause deforestation in Malaysia and Indonesia. Palm oil is the most popular biodiesel feedstock in the EU (2.6m tonnes of the oil used in 2017 according to the USDA). The ban is likely to impact on canola/rapeseed and soybean oil demand from the EU.

Metals

  • Australia’s Fortescue Metals Group, the world’s fourth largest iron ore producer, has reported that iron ore output costs fell to a record low in the last quarter, and forecasted a pickup in demand from March, sending its share price upwards. The drop in costs were thanks to improved efficiencies.
  • Chile is opening up negotiations for an additional quota of lithium for local miner SQM in preparation to meet potential demand from Tesla for its EV batteries.
  • The Democratic Republic of Congo (DCR), the world's largest cobalt producer, is poising itself for clashes with some of the world's key mining companies following the passing of a new law which looks set to increase taxes on cobalt such that royalties for the EV battery metal could rise from 2% to as much as 10%.
  • The world's mining companies continue to enjoy their best run since 2010 but some are questioning whether or not the sector's bumper payouts to investors will be able to be sustained. Many believe that as long as Chinese demand holds up the industry's policies which place profits and dividends above megamergers or the building of new expensive mines means that shareholders will continue to benefit for time to come. Others however flag the industry's susceptibility to drastic boom-bust cycles as a concern.

Energy - UK 

  • Prices across the UK and Europe have been slightly lifted this week on the back of forecasts for a prolonged cold snap going into February
  • Energy UK, Great Britain's energy industry trade association, has warned that in order for the UK to ensure affordable security of energy supply and meet its climate change targets the UK needs to continue participating in the EU's energy market.
  • Eggborough, Yorkshire's major coal-fired power plant, is to close by the end of this year. The closure comes following the plant's failure to secure government subsidies to provide electricity next winter. The closure is yet another sign of the decline of the UK's coal-fired power generation and is in line with the government's pledge for 85% of the UK's power to come from low-carbon sources by 2032.

Energy - International

Oil

  • The Energy Information Administration (EIA) forecasts that US fossil fuel (natural gas, crude oil and hydrocarbon gas liquids) production is likely to reach record levels in 2018 (expected to average 73 quadrillion Btu) and 2019 (expected to average 75 quadrillion Btu). The expected record output is predominantly attributable to increased production of natural gas via hydraulic fracking techniques.
  • Iraq’s oil minister has confirmed that Iraq will comply “in genuine spirit” with OPEC-led efforts to curb supplies.

Other

  • EURELECTRIC, which represents around 3,500 European power companies, has confirmed its commitment to playing a key role in moving Europe’s power generation to a more sustainable, carbon neutral energy economy.